Dear Readers. Today we are presenting Banking Awareness Study notes for Bank Exams. These notes are very helpful and required for every banking exam candidate. This time our topic is About RBI And Monetary Policy all complete notes information for you. If you are a IBPS PO, IBPS Clerk, SBI PO, SBI Clerk, RBI Grade 'A' and 'B' officer, RBI Assistants, RRBs CWE, SSC or RRB NTPC Exam candidate then you must read these notes.
Breaking News on RBI monetary policy updated and published at various News channel and news papers in India recently. So, today we are giving some quick revision study notes on banking for upcoming bank exams.
Must Read & Check : RBI Third Bi-Monthly Monetary policy 2016-17 Important Highlights
About RBI And Monetary Policy
The Reserve Bank of India (RBI) was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.
The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though originally privately owned, since nationalization in 1949, the Reserve Bank is fully owned by the Government of India.
Main Functions of Reserve Bank of India (RBI)
- Formulates implements and monitors the monetary policy.
- Objective: maintaining price stability and ensuring adequate flow of credit to productive sectors.
Regulator and Supervisor of the Financial System
- Prescribes broad parameters of banking operations within which the country’s banking and financial system functions.
- Objective: maintain public confidence in the system, protect depositors‟ interest and provide cost-effective, banking services to the public.
Manager of Foreign Exchange
- Manages the foreign exchange in accordance with the provision of Foreign Exchange Management, Act, 1999.
- Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.
Issuer of Currency
- Issues and exchanges or destroys currency and coins not fit for circulation.
- Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.
Performs a wide range of promotional functions to support national objectives.
- Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.
- Banker to banks: maintains banking accounts of all scheduled banks.
- Monetary policy refers to the use of instruments under the control of the central bank to regulate the availability, cost and use of money and credit.
- The goal: achieving specific economic objectives, such as low and stable inflation and promoting growth.
- Definition by wikkipidea is : Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.
The main objectives of Monetary Policy in India are
- Maintaining price stability
- Ensuring adequate flow of credit to the productive sectors of the economy to support economic growth.
- Financial stability.